Kidnap and Ransom Insurance

What is Kidnap and Ransom Insurance?

Kidnap and ransom insurance, also known as K&R insurance, is designed to help protect the corporations and individuals that are operating in high risk areas around the world, like Nigeria, Mexico, Haiti, and other areas. The policies are indemnity policies, meaning that they reimburse a loss incurred by the person that is insured. The policies are not able to pay the ransoms on the behalf of the insured, however. The individual must pay the random and then incur the loss, which would allow for them to be able to get reimbursement under the policy itself.

What Does Kidnap and Ransom Insurance Cover?

Kidnap and ransom insurance generally covers the perils that are associated with extortion, hijacking, wrongful detention, and kidnapping. The losses that are generally reimbursed by the policies are payments for ransom, loss of ransom in transit, and additional expenses, like medical expenses. The ironic part is that most people who have kidnap and random insurance are not even aware that they are covered because it may be provided by an employer that is hoping to ensure that they are protecting the assets of the company. Employees that have knowledge of their kidnap and ransom policy are believed to act differently – to the extent that they might even try to arrange their own kidnapping for fraud.

What Are the Cost Expectations for Kidnap and Ransom Insurance?

Generally speaking, most people never pay for their own kidnap and random insurance – it’s generally an insurance coverage that they are not aware that they have. However, it’s believed that criminal gangs make around $500 million a year just based on the payments that come from kidnap and ransom payments from these policies. The cost that the insurance may pose to businesses depends on the amount of employees that are insured and whatever the policy may determine to be their worth in the long run. This insurance is not common therefore the prices are not common. The cost expectations are generally high and there are not many options to lower the amounts.

What Are the Benefits of Kidnap and Ransom Insurance?

Policies generally indemnify the personal accident losses that are also caused by a kidnapping. This would include dismemberment, death, and permanent total disablement of a person who has been kidnapped. It would pay for the fees and expenses that are associated with crisis management professionals. The consultants would be used to provide advice to the insured on how they would be able to handle the incident. Some policies may be custom written so that they provide coverage to families and corporations. There are even policies which provide training in kidnapping prevention to ensure that the insured will be the most likely to be safe in any situation that may occur. Obviously, the benefit of having this type of insurance is truly released when someone has been kidnapped or circumstances have arrived where ransom is necessary in order to ensure that the individual will be able to be returned.